Canadian stocks tumbled

Index Update:  Canadian stocks tumbled after Israel and Iran stepped up attacks, leaving investors to hold back from big moves as inflationary concerns grow bigger. The benchmark S&P/TSX Composite Index  traded firmly negative before settling at 31,854.98, down by 457.69 points (or 1.42%).

Macro Update:  Yesterday, the Bank of Canada held interest rates at 2.25% as it expects global inflation to move higher in the near-term due to the gulf war. The central bank asserted that it was open to hiking rates if needed. Being a net oil exporter, Canada has been relatively insulated from crude oil price shocks so far. On the data front, there were no significant prints to be released today. High-level officials from Canada are in discussions with their U.S. counterparts to negotiate mutually favorable terms for the upcoming renewal of Canada-United States-Mexico trade agreement. In a report published today, the World Trade Organization has observed that growth in global trade in goods will decelerate to 1.90% in 2026, from 4.60% in 2025 and could downslope further if the Middle East war continues without an end in sight.

Top Movers: Among the individual stocks, Vermilion Energy Inc (14.36%), Methanex Corp (6.73%), Cenovus Energy Inc (4.17%), Athabasca Oil Corp (3.27%), Headwater Exploration Inc (3.27%), and Celestica Inc (3.91%) were the prominent gainers.

Our Stance: Momentum indicators remain slightly weak, with the 14-period Relative Strength Index (RSI) at 34.45, indicating a loss of strength in price action. On the downside, the 31,500 level stands as immediate support, and a break below this zone could open the door for further consolidation toward the 31,100 mark.

Commodity Update:  The dollar retreated from multi-month highs as rising energy prices reshaped global rate expectations, leaving the U.S. Federal Reserve as the only major central bank unlikely to hike rates this year. Earlier expectations of two rate cuts have faded. Gold jumped 2.45% to USD 4,719.10, silver rose 4.18% to USD 74.13, and copper gained 0.86% to USD 12,297.70, while Brent crude declined 2.00% to USD 116.48.

Technical Update:

The S&P/TSX Composite Index edged lower on Thursday, closing at 31,854.98, as profit-taking cooled recent upside momentum. Despite the pullback, the broader technical outlook remains constructive, suggesting a phase of healthy consolidation rather than a trend reversal. The index continues to trade below its 50-period Simple Moving Average (SMA), which is acting as a key resistance support. However, momentum indicators remain slightly weak, with the 14-period Relative Strength Index (RSI) at 34.45, indicating a loss of strength in price action. On the downside, the 31,500 level stands as immediate support, and a break below this zone could open the door for further consolidation toward the 31,100 mark.